Fewer Wisconsinites are Struggling Thanks to Help from the Government

Wednesday, September 23, 2015 at 3:48 PM by

Wisconsin Should Do More to Build On This Success

The federal government made a big difference in the lives of struggling people in 2014, showing the powerful role governments can play in creating opportunity and helping people build a more secure future. An analysis of new data from the Census Bureau demonstrates the success of federal programs and underscores the need for Wisconsin to do more to build on that success through its own opportunity-expanding policies, such as increasing the minimum wage and reversing cuts to the state’s Earned Income Tax Credit. 

Almost one in five Wisconsin children live in families that made so little in 2014 that they were below the federal poverty level, according to new Census Bureau data released last week – meaning that they couldn’t afford basic necessities. The poverty level is currently $11,770 for a single person and $24,250 for a family of four. Fortunately, key safety net supports are keeping millions from living in dire circumstances, something not captured in the official poverty measure. 

A supplemental measure of poverty offered by the Census Bureau shows us that several government programs are making a substantial difference. The Supplemental Poverty Measure (SPM) accounts for the help people making low-wages receive from key safety net supports, including all non-cash benefits (as well as cash benefits included in the regular poverty measure). The SPM also takes into account taxes and out-of-pocket medical and work expenses.

Researchers and policy analysts like the supplemental measure because counting a wide range of benefits as income makes it possible to gauge the effects that different federal programs have on the number of people who are unable to afford basic necessities:

  • Working-family tax credits like the federal Earned Income Tax Credit and Child Tax Credit lifted an estimated 9.8 million Americans out of poverty last year, including 5.2 million children, by helping families make ends meet.
  • Unemployment Insurance kept about one million people from poverty by helping workers stay afloat after a layoff.
  • SNAP – the Supplemental Nutrition Assistance Program, known as food stamps or in WI as Food Share – kept 2.1 million children and 2.6 million adults out of poverty by helping families pay for groceries.

fed-chart

Overall, when you make all the adjustments to income that are part of the Supplemental Poverty Measure, including taxes and work expenses, the poverty rate goes up from 14.9% to 15.3%, which amounts to more than 1.3 million additional people living below the poverty level. However, the results vary by race and ethnic group. For blacks, using the supplemental measure reduces the poverty rate by 2.9%, which amounts to 1.2 million fewer blacks being in poverty. 

The Census Bureau figures demonstrate that support for struggling people works, and that we have the tools to level the playing field and give people the opportunity to build a more secure future. In the richest country in the world, no one should ever have to go hungry or sleep on the street when there’s so much we can do to help people get on a better path. 

Other figures released last week by the Census Bureau reinforce our concerns that economic growth is being enjoyed primarily by the wealthy and the gap between the rich and the rest of us keeps getting wider. As a result, too many people can’t make ends meet through no fault of their own. Federal programs don’t fully remedy the problems caused by widening inequality, but the Supplemental Poverty Measure shows that federal programs like food stamps and the refundable tax credits partially alleviate the harsh effects of the wide economic disparities. 

Wisconsin can build on the federal government’s track record of success by creating our own policies that make it easier for people to build a secure future. For example, Wisconsin should increase the minimum wage and reverse cuts to the state’s Earned Income Tax Credit, which would give far more Wisconsinites the opportunity to climb the economic ladder and build a secure future. 

Jon Peacock

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